Dow Chemical faces lawsuit over Carbide purchase
Rediff.com, May 17, 2000
Dow Chemical Co, which is looking to buy rival Union Carbide Corp, has been sued for failing to disclose that UCC still faces huge liabilities from the 1984 Bhopal gas disaster.
A summary of the allegations made in the lawsuit was provided to rediff.com by the law offices of Curtis V Trinko. The lawsuit was filed in the United States district court for the southern district of New York on behalf of all common stockholders of Dow Chemical Co.
The complaint alleges that Dow failed to disclose to the Securities and Exchange Commission that UCC continues to be a named defendant in a criminal prosecution in a Bhopal court.
Furthermore, it says, Union Carbide failed to appear in an Indian criminal court and was named a 'proclaimed absconder' and all its assets were attached by the court. As a result, Dow's Indian holdings will also be in danger of being attached, and this will interfere with Dow's plans to expand operations in India, the complaint says.
It further alleges that Dow's failure to address these matters has caused it to (1) underestimate the liabilities it stands to assume; (2) make an excessive offer to render more than $9 billion worth of its stock in exchange for all outstanding shares of Union Carbide.
Dow has won the European Union's sanction to proceed with its purchase of Union Carbide for $11.6 billion in stock and debt. The merger will make it the world's No 2 chemical maker.
In 1984, Union Carbide's Bhopal plant leaked methyl isocyanate gas into the air, killing about 3,000 people and injuring 50,000.
A Dow spokeswoman refused to comment on the lawsuit.
by Nitish S Rele